Could No One See this Coming?

Moral Hazard--the Financial Industry's term for Fraud

http://en.wikipedia.org/wiki/Moral_Hazard

Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions. For example, an individual with insurance against automobile theft may be less vigilant about locking his or her car, because the negative consequences of automobile theft are (partially) borne by the insurance company.

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http://www.nytimes.com/2008/11/17/business/economy/17gramm.html?_r=2&pagewanted=3

On Ex-Senator Phil Gramm, who was John McCain’s financial advisor:

He led the effort to block measures curtailing deceptive or predatory lending, which was just beginning to result in a jump in home foreclosures that would undermine the financial markets. He advanced legislation that fractured oversight of Wall Street while knocking down Depression-era barriers that restricted the rise and reach of financial conglomerates.

And he pushed through a provision that ensured virtually no regulation of the complex financial instruments known as derivatives, including credit swaps, contracts that would encourage risky investment practices at Wall Street’s most venerable institutions and spread the risks, like a virus, around the world…

In the final days of the Clinton administration a year later, Mr. Gramm celebrated another triumph. Determined to close the door on any future regulation of the emerging market of derivatives and swaps, he helped pushed through legislation that accomplished that goal.

Created to help companies and investors limit risk, swaps are contracts that typically work like a form of insurance. A bank concerned about rises in interest rates, for instance, can buy a derivatives instrument that would protect it from rate swings. Credit-default swaps, one type of derivative, could protect the holder of a mortgage security against a possible default.

Earlier laws had left the regulation issue sufficiently ambiguous, worrying Wall Street, the Clinton administration and lawmakers of both parties, who argued that too many restrictions would hurt financial activity and spur traders to take their business overseas. And while the Commodity Futures Trading Commission — under the leadership of Mr. Gramm’s wife, Wendy — had approved rules in 1989 and 1993 exempting some swaps and derivatives from regulation, there was still concern that step was not enough….

Mr. Gramm helped lead the charge in Congress. Demanding even more freedom from regulators than the financial industry had sought, he persuaded colleagues and negotiated with senior administration officials, pushing so hard that he nearly scuttled the deal. “When I get in the red zone, I like to score,” Mr. Gramm told reporters at the time.

Finally, he had extracted enough. In December 2000, the Commodity Futures Modernization Act was passed as part of a larger bill by unanimous consent after Mr. Gramm dominated the Senate debate.

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WHAT ARE DERIVATIVES?

http://topics.nytimes.com/top/reference/timestopics/subjects/d/derivatives/index.html?inline=nyt-classifier

Derivatives are financial instruments that were created to reduce risk, and their use on Wall Street is known as hedging. In recent years, however, as their prevalence and complexity ballooned, they have created new kinds of risk and have played a major role in the meltdown of the world's financial system.

Their name comes from the fact that their value “derives” from underlying assets like stocks, bonds and commodities.

One of the easiest ways to understand derivatives is to consider an early example -- traders in Chicago in the 19th century buying corn futures. A contract that guaranteed a certain amount of corn at a certain price at a date in the future helped reduce the risk the trader faced, since he would have some protection if prices rose. But that future also had a value in and of itself, one that rose and fell with the price of corn -- when prices went up, a contract for corn at a cheap price was worth more. So futures were traded as avidly as corn.

The most common types of derivatives are futures; forwards, which are futures traded outside of a regular exchange; options, which are the right to buy or sell something at a specified date and price; and swaps, contracts involving an exchange of assets or payments.

In recent years, a bewildering variety of derivatives have been developed. Two types that have played a central role in the recent turmoil are mortgage-backed securities, whose value depends on the value of the mortgages, which depends on how many of them are being paid off, and credit default swaps, which are in essence a form of insurance policy, and whose value swings with the fiscal health of the transaction or asset it is written to cover.

The derivatives market today is $531 trillion, up from $106 trillion in 2002 and a relative pittance just two decades ago. Theoretically intended to limit risk and ward off financial problems, the contracts instead have stoked uncertainty and actually spread risk amid doubts about how companies value them.

The contracts allowed financial services firms and corporations to take more complex risks that they might have otherwise avoided — for example, issuing questionable mortgages or excessive corporate debt. The fact that they can be traded in one sense limited risk but also increased the number of parties exposed when problems emerged.

Throughout the 1990s, some argued that derivatives had become so vast, intertwined and inscrutable that they required federal oversight to protect the financial system. But the financial industry lobbied heavily against such measures, and won backing from important figures, including Alan Greenspan, chairman of the Federal Reserve from 1987 to early 2006.

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WHAT ARE CREDIT DEFAULT SWAPS?

http://topics.nytimes.com/top/reference/timestopics/subjects/c/credit_default_swaps/index.html?inline=nyt-classifier

Credit default swaps, which were invented by Wall Street in the late 1990's, are financial instruments that are intended to cover losses to banks and bondholders when a particular bond or security goes into default -- that is, when the stream of revenue behind the loan becomes insufficient to meet the payments that were promised.

In essence, it is a form of insurance. Its purpose is to make it easier for banks to issue complex debt securities by reducing the risk to purchasers, just like the way the insurance a movie producer takes out on a wayward star makes it easier to raise money for the star's next picture.

Here is a more detailed, but still simplified explanation of how they work, given by Michael Lewitt, a Florida money manager, in a New York Times Op-Ed piece on Sept. 16, 2008:

"Credit default swaps are a type of credit insurance contract in which one party pays another party to protect it from the risk of default on a particular debt instrument. If that debt instrument (a bond, a bank loan, a mortgage) defaults, the insurer compensates the insured for his loss.

"The insurer (which could be a bank, an investment bank or a hedge fund) is required to post collateral to support its payment obligation, but in the insane credit environment that preceded the credit crisis, this collateral deposit was generally too small.

"As a result, the credit default market is best described as an insurance market where many of the individual trades are undercapitalized."

The market for the credit default swaps has been enormous. Since 2000, it has ballooned from $900 billion to more than $45.5 trillion — roughly twice the size of the entire United States stock market. Also in sharp contrast to traditional insurance, the swaps are totally unregulated.

When the mortgage-backed securities that many swaps were supporting began to lose value in 2007, investors began to fear that the swaps, originally meant as a hedge against risk, could suddenly become huge liabilities.

The swaps' complexity and the lack of information in an unregulated market added to the market's anxiety. Bond insurers like MBNA and Ambac that had written large amounts of the swaps saw their shares plunge in late 2007.

Credit default swaps also played an integral role in the federal government's decision to bail out the American International Group, one of the world's largest insurers, in September 2008. The Federal Reserve concluded that if A.I.G. failed and defaulted on its swaps, throwing the liability for the insured securities onto the swaps' counterparties, the result could be a daisy chain of failures across the international financial system.

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http://en.wikipedia.org/wiki/Credit_default_swap

A credit default swap (CDS) is a credit derivative contract between two counterparties. The buyer makes periodic payments (premium leg) to the seller, and in return receives a payoff (protection or default leg) if an underlying financial instrument defaults.[1] CDS contracts have been compared to insurance, because the buyer pays a premium and, in return, receives a sum of money if a specified event occurs. However, there are a number of differences between CDS and insurance; the buyer of a CDS does not need to own the underlying security; in fact the buyer does not even have to suffer a loss from the default event.[2][3][4]

A credit default swap (CDS) is a swap contract in which the buyer of the CDS makes a series of payments to the seller and, in exchange, receives a payoff if a credit instrument (typically a bond or loan) goes into default or on the occurrence of a specified credit event (for example bankruptcy or restructuring). Credit Default Swaps can be bought by any (relatively sophisticated) investor; it is not necessary for the buyer to own the underlying credit instrument.[5]…

…Credit default swaps are often used to manage the credit risk (ie the risk of default) which arises from holding debt. Typically, the holder of, for example, a corporate bond may hedge their exposure by entering into a CDS contract as the buyer of protection. If the bond goes into default, the proceeds from the CDS contract will cancel out the losses on the underlying bond.

…Credit Default Swaps were invented in 1997 by a team working for JPMorgan Chase[7][8]. Credit Default Swaps became legal, and illegal to regulate, with the Commodity Futures Modernization Act of 2000. They were introduced and rushed through congress as a companion bill, the last day before the Christmas holiday. It was never debated in the House or the Senate. The bill was 11,000 pages long. Less than a week after it was passed by congress, President Clinton signed it into Public Law (106-554) on December 21, 2000.

…For example, at the time it filed for bankruptcy on 14 September 2008, Lehman Brothers had approximately $155 billion of outstanding debt[21] but around $400 billion notional value of CDS contracts had been written which referenced this debt.[22]

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http://crooksandliars.com/silentpatriot/60-minutes-bets-brought-down-wall-st

As Steve Kroft reports, essentially they are side bets on the performance of the U.S. mortgage markets and the solvency on some of the biggest financial institutions in the world. It's a form of legalized gambling that allows you to wager on financial outcomes without ever having to actually buy the stocks and bonds and mortgages.

It would have been illegal during most of the 20th century, but eight years ago Congress gave Wall Street an exemption and it has turned out to be a very bad idea.

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http://www.cbsnews.com/stories/2008/10/26/60minutes/main4546199.shtml

“Think of it for a moment as a football game. Every week, the New York Giants take the field with hopes of getting back to the Super Bowl. If they do, they will get more money and glory for the team and its owners. They have a direct investment in the game. But the people in the stands may also have a financial stake in the ouctome, in the form of a bet with a friend or a bookie.

"We could call that a derivative. It's a side bet. We don't own the teams. But we have a bet based on the outcome. And a lot of derivatives are bets based on the outcome of games of a sort. Not football games, but games in the markets," Partnoy explains.

Partnoy says the bet was whether interest rates were going to go up or down. "And the new bet that arose over the last several years is a bet based on whether people will default on their mortgages.”

Dinallo says credit default swaps were totally unregulated and that the big banks and investment houses that sold them didn't have to set aside any money to cover their potential losses and pay off their bets.

"As the market began to seize up and as the market for the underlying obligations began to perform poorly, everybody wanted to get paid, had a right to get paid on those credit default swaps. And there was no 'there' there. There was no money behind the commitments. And people came up short. And so that's to a large extent what happened to Bear Sterns, Lehman Brothers, and the holding company of AIG," he explains. …

In other words, three of the nation's largest financial institutions had made more bad bets than they could afford to pay off. Bear Stearns was sold to J.P. Morgan for pennies on the dollar, Lehman Brothers was allowed to go belly up, and AIG, considered too big to let fail, is on life support to thanks to a $123 billion investment by U.S. taxpayers.

Noblesse Oblige my ass!

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How Much Would You Pay in Taxes?

October 12, 2008

SOURCE:
http://www.parade.com/news/intelligence-report/archive/how-much-would-you-pay-taxes.html?archive=true

Sens. Barack Obama and John McCain both say they’ll cut federal taxes if elected. Here’s what their proposals would mean for you.

	Obama	McCain
If you make...	you'd save...	you'd save...
less than $19,000	$567	$21
$19,000-$37,600	$892	$118
$37,600-$66,400	$1118	$325
$66,400-$111,600	$1264	$994
$111,600-$161,000	$2135	$2584
$161,000-$227,000	$2796	$4437
If you're in the top 5% of earners...	you'd pay an extra...	you'd save...
$227,000-$603,400	$121	$8159
$603,400-$2.87 million	$93,709	$48,862
more than $2.87 million	$542,882	$290,708

*Source: Tax Policy Center. Numbers have been rounded. For complete details, go to TaxPolicyCenter.org.


If your annual salary is less than $112,000, you’d pay less in taxes under Obama’s plan; if your salary is higher, McCain would cut your taxes more. “While the aggregate tax cut is bigger for McCain, a larger number of voters get more money under Obama,” says Alan Viard, a tax-policy expert at the conservative American Enterprise Institute. “Obama is choosing to emphasize tax cuts for the middle class, whereas McCain’s strategy is to keep rates lower at the top as a way to facilitate long-run growth.” For example, a person with an income of $1 million could see his taxes increase under Obama by as much as $94,000, whereas under McCain’s plan he could save about $48,000.

— Rebecca Davis O'Brien

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Moron-Math Used to Claim Exxon-Mobil is Overtaxed

8/18/2008

When oil-industry propagandists try to fool the public into showing sympathy for the greedy oil monopolies, they lately cite the high taxes the oil companies pay. What???

Exxon-Mobil profits are up 70% in the most recent three-month sales report. But a recent soundbite says that in the last 3 months, "Exxon paid almost $3 in taxes ($32.361 billion) for every $1 in profits ($11.68 billion)".

Certainly the U.S. government doesn't charge income taxes at a 75% rate. So what are these guys talking about?

And since Exxon's total revenue was $138 billion and the taxes they paid were $32 billion, they are not even paying a 33% tax rate!!

Doing the math, there's $106 billion of other money that flowed through Exxon during those three months, and most of it they don't call "profit". Yeah, some of it was to pay the suppliers of the crude oil; of course, they are also the supplier of a lot of that oil.

I'd sure like to tell the the IRS that about my small business.


According to CNN, http://money.cnn.com/2008/07/31/news/companies/exxon_profits/?postversion=2008073109

"The company returned $10.1 billion to shareholders in the form of dividends and stock buybacks, 12% more than last year."

This doesn't count as a profit for the company. The shareholders pay the taxes on it instead.

And a lot of those taxes are not really "paid" by the company.

The oilmeisters love to whine a lot about gas taxes being the problem. For example, $9.5 billion of the taxes Exxon paid in that quarter were sales taxes which the company merely extracts from consumers and then passes onto the government. And of course, that gas tax goes to pay for roads, which keeps us all driving and buying their gas.

Of course, our ever-non vigilant media always fails to reveal that while the price of a barrel of oil has zoomed, the profit for refining that barrel has also zoomed. The "refining margin" is a forgotten statistic, and that profit goes only to the USA oil monopolies, not to some "foreigners" who are ripping off Americans.

How much of the spike in oil prices has really gone to other countries, and how much has been grabbed by the big-5 worldwide oil monopolies?

I wish someone would report that.

--Rex Frankel

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http://www.istockanalyst.com/article/viewarticle+articleid_2459357&title=Exxon_Posts_Record.html

Exxon Mobil once again reported the largest quarterly profit in U.S. history Thursday, posting net income of $11.68 billion on revenue of $138 billion in the second quarter.
That profit works out to $1,485.55 a second.

Buried in the story we also find that "In addition to making hefty profits, Exxon also had a hefty tax bill. Worldwide, the company paid $10.5 billion in income taxes in the second quarter, $9.5 billion in sales taxes, and over $12 billion in what it called 'other taxes.'"

MP: In other words, Exxon Mobil paid $32.361 billion in taxes in the second quarter, which works out to $4,114 in taxes per second. Another way to look at it - Exxon paid almost $3 in taxes ($32.361 billion) for every $1 in profits ($11.68 billion), see chart above.

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http://money.cnn.com/2008/07/31/news/companies/exxon_profits/?postversion=2008073109
7/31/2008

NEW YORK (CNNMoney.com) -- Exxon Mobil once again reported the largest quarterly profit in U.S. history Thursday, posting net income of $11.68 billion on revenue of $138 billion in the second quarter.

That profit works out to $1,485.55 a second.

That barely beat the previous corporate record of $11.66 billion, also set by Exxon in the fourth quarter of 2007.

"The fundamentals of our business remain strong," Henry Hubble, Exxon's vice president of investor relations, said on a conference call. "We continue to capture the benefit of strong industry conditions."

But Exxon (XOM, Fortune 500) profit fell short of Wall Street estimates.

Analysts predicted the company, the world's largest publicly traded oil firm, would make $12.1 billion in profit on $144.4 billion in revenue, according to Thomson Reuters.

Exxon shares fell about 3% on the New York Stock Exchange.

Excluding money set aside for a recent damage award related to the Valdez tanker spill back in 1989, Exxon made $11.97 billion in the quarter.

Pricey oil cuts both ways

Exxon was both helped and hurt by high oil prices.

As an oil producer, the company makes a lot of money when crude prices rise. Exxon made $10 billion from selling oil in the latest quarter, up nearly 70%.

But as a refiner, it must also buy crude oil to turn into gasoline. Exxon actually buys more crude than it sells.

Profits from its refining business totaled $1.6 billion in the quarter, less than half of what they were last year.

"Record crude oil and natural gas realizations were partly offset by lower refining and chemical margins, lower production volumes and higher operating costs," read a statement attributed to Rex Tillerson, Exxon's chief executive.

While oil prices in the quarter were nearly twice as high as the same time last year, gasoline prices only rose about 30%.

That's one reason why the stock of major oil companies - such as Exxon, Chevron (CVX, Fortune 500), Royal Dutch Shell (RDSA) and BP (BP) - that both produce and refine crude has been relatively flat over the last year, despite the runup in oil prices.

Meanwhile, shares of companies that mostly produce oil, like Anadarko and Apache, have soared in the last year, while shares in refiners like Valero and Sunoco have tumbled.

Where the money goes

Exxon spent $7 billion in the second quarter finding and producing more new oil, up 38% from last year. Still, oil and natural gas production from the company fell 8%. Even excluding special events such as a labor strike in Nigeria and seizure of fields in Venezuela, production slipped 3%.

The production declines shouldn't be seen as an indicator the world is running out of oil, said Fadel Gheit, a senior energy analyst at Oppenheimer.

Rather, as the price of oil rises, the amount of oil Exxon or any international oil firm is allowed to pump from many oil-rich countries decreases, said Gheit.

"We didn't expect production to be down as much as reported," he said. "But that doesn't mean [worldwide] production is down, just that Exxon's share is decreasing."

The company returned $10.1 billion to shareholders in the form of dividends and stock buybacks, 12% more than last year.

On an earnings-per-share basis, Exxon made $2.22. That was still lower than analysts had expected, but 24% higher than last year, a gain Exxon attributed to its aggressive stock buyback plan.

The big international oil companies have been criticized for plowing much of their profits back into stock buybacks and other programs to benefit shareholders, as opposed to exploring for more oil which could bring down the price of crude for everyone.

"While oil companies are earning record profits and gas prices are soaring, the largest oil companies have invested more resources in stock buybacks than U.S. production," said Congressional Democrats in a press release shortly after Exxon announced its earnings.

Other critics charge the oil companies with deliberately restricting production in an attempt to keep prices high.

The industry says it's investing as much as it can in finding new oil, but is having a hard time given the shortage of workers and equipment in the sector.

Recent efforts by countries such as Russia, Venezuela and Kazakhstan to gain greater control of their own domestic oil resources have also hampered the ability of international oil companies to increase production.

In addition to making hefty profits, Exxon also had a hefty tax bill. Worldwide, the company paid $10.5 billion in income taxes in the second quarter, $9.5 billion in sales taxes, and over $12 billion in what it called "other taxes."

Political backlash

With Americans paying nearly $4 a gallon for gas, oil company earnings have been political fodder of late.

Congressional Democrats said they are having a conference later in the day to call for an end to tax breaks for big oil firms.

Several bills have been introduced in Congress to enact a "windfall" profits tax on these earnings, or at the very least eliminate manufacturing tax exemption oil companies now enjoy. Presumptive Democratic presidential nominee Barack Obama wants to tax oil companies at a special rate every time crude goes over $80 a barrel.

Most plans would either use this newfound tax money to fund investments in renewable energy, or give it to low income Americans struggling with high energy prices.

But so far those efforts have been blocked - mainly by Republicans - who say raising taxes on oil companies will only discourage investments in finding new oil and raise the price of crude.

Defenders of oil company profits also point out that their profit margin, at around 8%, is slightly below average for S&P 500 companies, and far below the 20%-plus margins seen at companies such as Microsoft or Pfizer.

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Giving “Choice” to a Captive Audience is bad for media behemoths:

The USA’s Biggest Radio monopolies are selling off stations, But sticking with their monopoly on billboards…

With the public turning to digital music players and podcasts, they can avoid the homogenized, ad-packed, junk-radio formats that litter the AM and FM dials in most cities. What they can’t miss, though, are the sky-blocking billboards owned by the same radio behemoths. During the late 1990’s, two corporations went on a deregulation-fueled radio and billboard buying spree. The two, CBS and Clear Channel, loaded up on debt to buy these speculation-steroid-enhanced properties. The results are mixed. CBS has done well, as it is insulated by its holdings in TV and publishing.

Clear Channel, on the other hand, which made its name in the early years of the Bush administration as the home of Rush Limbaugh and countless other right-wing radio hotheads, has lost a ton of someone’s (?) money. Their zeal to buy up radio stations led them to own over 1200 across the U.S. CBS, the next largest owner at its peak had 180 stations. Clear Channel reported losses totaling $21 billion in 2002 and 2005 due to the true value of their radio empire becoming evident, and they have sold off their 56 TV stations and are trying to sell off over 400 radio stations in smaller USA markets. Clear Channel was recently sold to several investment groups for $17.9 billion, after a $19.5 billion deal fell through.

With the economy in the dumper lately, a lot of the USA media are fighting themselves for market share—ah, yes, competition, we haven’t seen that for a while. As the internet has gobbled up ads from daily newspapers, we are seeing hard times for the daily papers that have largely served up corporate press releases to their readers masquerading as news.

Most important to the media monopolies is a “captive” audience. This is when we have over 100 cable channels available to us, but most of them are owned by the 5 media monopolies (CBS/Viacom, GE, Time-Warner, Fox and Disney). For daily newspapers, in most cities in the USA we have only one choice. For radio, the listeners and ad revenues are monopolized by CBS and Clear Channel, who each have 8 radio stations in L.A., for example. The big profit is in the audience having no alternative, and therefore, we are captive watchers or listeners. For example, when I tune into the 6 L.A. rock music stations, and a commercial block comes on, when I switch stations, guess what? They and all the other rock stations are playing commercials, too. Is this coincidence or collusion?

Thanks to my digital music player, I can pack my entire music collection in a little box. I really don’t miss the inane, pre-recorded chatter. I can always look away from the billboards, unless I’m stuck in the gridlocked traffic.

But that’s another rant…

---by Rex Frankel

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CBS to sell 50 of its radio stations:

http://www.latimes.com/business/la-fi-cbs1-2008aug01,0,6157912.story

August 1, 2008

“The New York-based broadcasting company, controlled by billionaire Sumner Redstone, said Thursday that it planned to sell 50 radio stations in a dozen mid-size markets as ad revenue continued to slide in a weak economy. The company's once-mighty radio division continued to produce static and a drag on the company's earnings…

…Just two years ago, CBS Radio boasted nearly 180 radio stations. It has since shed about 40 stations, and with the planned sale of 50 more, the company would cut its holdings to about 90 stations. Included on its roster are Los Angeles powerhouse AM stations KNX 1070 and KFWB 980.

Analyst Tom Taylor said CBS might look to sell stations in such markets as Sacramento, Riverside and Las Vegas to focus on big-market stations that produce greater revenue. The loss of Howard Stern, who defected to satellite radio, continues to be felt, he said.”

http://www.redorbit.com/news/technology/797894/clear_channel_sells_radio_stations_to_rincon_for_173_million/index.html

...Thought Oil Companies Put their Huge Profits into Finding New Supplies of Oil? Think Again:


Where Big Oil's profits go

By John Porretto, The Associated Press
7/21/2008

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/07/21/financial/f140139D71.DTL&feed=rss.business

HOUSTON - As giant oil companies like Exxon Mobil and ConocoPhillips get set to report what are expected to be another round of eye-popping quarterly profits, just where is all that money going?

The companies insist they're trying to find new oil that might help bring down gas prices, but the money they spend on exploration is nothing compared with what they spend on stock buybacks and dividends.

It's good news for shareholders, including mutual funds and retirement plans for millions of Americans, but no help to drivers already making drastic cutbacks to offset the high cost of fuel.
The five biggest international oil companies plowed about 55 percent of the cash they made from their businesses into stock buybacks and dividends last year, up from 30 percent in 2000 and just 1 percent in 1993, according to Rice University's James A. Baker III Institute for Public Policy.

The percentage they spend to find new deposits of fossil fuels has remained flat for years, in the mid-single digits.

Growing profits

The issue has become more sensitive as lawmakers and Americans frustrated by high gas prices have balked at gaudy reports of oil industry profits. ConocoPhillips is scheduled to kick off the latest round of Big Oil earnings reports Wednesday.

Oil prices are set on the open market, not by the oil industry. But that hasn't stopped public protests, a series of congressional grillings for top oil executives, and a failed attempt by lawmakers to slap Big Oil with a windfall profits tax.

In the first three months of this year, Exxon Mobil Corp., the world's biggest publicly traded oil company, shelled out $8.8 billion on stock buybacks alone, compared with $5.5 billion on exploration and other capital projects.

ConocoPhillips has already told investors that its stock buybacks for April to June of this year will come to about $2.5 billion - nine times what it spent on exploration.
Stock buybacks are common throughout corporate America, not just for Big Oil. They shrink the amount of stock on the open market, essentially increasing its value and giving individual shareholders a bigger stake in the company.

But some critics say Big Oil focuses too much on boosting stock prices, in an industry that sometimes ties executive pay to stock price.

And in focusing on buybacks and dividends over exploring for new oil, some critics say, oil companies jeopardize its already dwindling share of world supply.
"If you're not spending your money finding and developing new oil, then there's no new oil," said Amy Myers Jaffe, an energy expert at Rice University who's studied spending patterns of the major oil companies.

Investor-owned companies like Exxon Mobil and Chevron hold less than 10 percent of global oil and gas reserves, way down from past decades. And finding new oil has become harder and more expensive.

State-run oil companies, like those in Saudi Arabia and Venezuela, control about 80percent of oil reserves - and at today's prices, it's not surprising they're keeping a tight grip on what they have. Scarce equipment and hard-to-find labor also pose problems.

No one questions that Big Oil is rolling in cash. The cash the biggest oil companies bring in from running their businesses, or operating cash flow, is four times what it was in the early 1990s.
"It becomes a management decision," said Howard Silverblatt, a senior index analyst at Standard & Poor's. "It's not like they're going to the board and saying, `Well, I can do one or the other or the other.' The balance sheets are flush with cash."

The companies say they are doing what they can to find more fossil fuels around the world, but the easy oil is gone. Exploring these days may mean expensive projects in thousands of feet of water in the Gulf of Mexico or costly ventures pulling petroleum from Canada's vast oil-sands deposits.

TransCanada Corp. and ConocoPhillips Co. just said they'd spend $7 billion to nearly double the amount of crude flowing through a pipeline from Canada's tar sands to the U.S. Gulf Coast.
Analysts point out that because there's no guarantee prices will stay high, oil companies should approach exploration projects with caution.

Lag time involved

"There's only so much money you can throw at it without being ridiculous," said Joseph Stanislaw, a senior adviser to Deloitte LLP's Energy & Resources practice. "I think they're doing what they can."

It's also important to remember it can take several years before a company produces the first barrel of oil from a new field.

One example is an oil field in the Gulf of Mexico called Thunder Horse. Operated by BP and partly owned by Exxon Mobil, the platform only last month began producing oil and gas - nine years after the field's discovery.

At its peak, the multibillion-dollar project is designed to produce 250,000 barrels of oil and 200 million cubic feet of natural gas each day, which would make it the Gulf's largest producer.
"When you look at the spending that's going on, the companies are bringing on a lot of long-term discoveries," said John Parry, a senior analyst with John S. Herold Inc.

At ConocoPhillips, the capital spending budget for 2008, which includes exploration and production, is $15.3 billion, more than double the spending of five years ago.

"Could we spend $20 billion or $25 billion? Absolutely," spokesman Gary Russell said. "Could we do it effectively, in a way that provides ultimate value to our shareholders? Probably not."

Exxon Mobil has drawn criticism for its reluctance to invest in alternative energy sources like wind and solar power.

"Only after the last tree has been cut down, only after the last river has been poisoned, only after the last fish has been caught, only then will you find that money cannot be eaten."

Cree Indian proverb

Feds Continue the Coverup of The Enron/Bush Greed scandal

It's Time to Mess With Texas...

A Guide to Corporate Welfare...

When our government does something to help the less fortunate in this country, there's always a chorus of so-called experts on the TV who call that "welfare for the undeserving." Most of the time, however, it seems our government prefers to take care of the needs of big corporations, which buy and sell most politicians from our major political parties. And yet, it's hard to find one of TV's alleged experts who will criticize the billions of dollars our government gives away each year to these big corporations. The corporate-owned media blacks out this information because they're also big recipients of corporate welfare....

continued...Corporations Give to Politicians; Politicians Give to Corporations...

Who's the Pirate Here?

From the hundreds protesting in Prague, the thousands protesting in Davos and Jakarta, and the tens of thousands protesting in Seattle, it is clear that people are fed up with the forces of economic domination and the increasing concentration of wealth. Anger is expressed with nonviolent vigils, vitriolic slogans, and broken windows. It is an anger born from the feelings of powerlessness in the face of a planetary machine trying to pave the world. Take heart. Just as every action produces its own reaction, the extreme of global corporatism fuels its own demise. There is already an effective economic response to global corporatism and its many official arms, including the WTO. This response is technologically sophisticated, worth untold billions of dollars, is grass roots oriented, and is gaining strength. It is considered illegal, even evil, in the eyes of global corporatism and its puppet national governments. However, there is a good chance you already participate in this economic enterprise.

It is the Pirate Economy.

The world's pirates are actively turning the tables on those with monopoly power. They are the lightest, quickest, least bureaucratic, most democratic, and--most importantly-most market-driven sector of our economy. In a world of corporate dinosaurs, the pirates are the rats feasting on dinosaur eggs...

Who's the Pirate Here? continued...

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Overvalued and Generally Evil, Clear Channel is in Trouble....

(next to Fox, the biggest media backer of the Bush regime)

Clear Channel, private equity firms sue banks
Radio and billboard company claims five banks renege on promise to finance$19.5 billion buyout.
March 26, 2008

http://money.cnn.com/2008/03/26/news/companies/clear_channel/index.htm?section=money_mostpopular

SAN ANTONIO (AP) -- Clear Channel Communications Inc. and the private equity firms seeking to close a $19.5 billion purchase of the company on Wednesday sued the banks backing the deal.

In lawsuits filed in Texas and New York, Clear Channel and the buyers group, led by Bain Capital and Thomas H. Lee Partners LLC, claimed the six banks that promised to finance the deal were reneging on the agreement to provide long-term financing, looking to offer little more than a short-term bridge loan.

"The lenders agreed to provide long-term financing," said Alex Stanton, a Bain spokesman. "They now have lenders' remorse because the credit markets have been difficult."
The lenders, which include Citigroup Inc., Morgan Stanley, Credit Suisse Group, The Royal Bank of Scotland, Deutsche Bank AG and Wachovia Corp., signed commitments when the deal was inked 18 months ago saying they would bear all the risk in changes to the debt market.

In that time, it has become more difficult for the banks to resell the loans so -- instead of sticking with the minimum six years of financing -- the lenders had sought to provide only a short-term loan, the equity firms and Clear Channel complained.

The firms contend the banks are trying to kill the deal by putting unreasonable terms on the loan.

"The behavior of these banks is irresponsible, unprofessional and unjustified. The defendants have made clear that they are determined, by any means possible, to destroy the merger and thus avoid their obligation to fund, as they are required legally to do," said Clear Channel CEO Mark Mays in a statement.

The banks issued a statement denying they failed to make good on their earlier commitment.
"The bank group presented the sponsors with credit agreements fully consistent and compliant with the commitment letter," said the statement issued by Citigroup on behalf of the lending consortium. "We believe the suits are without merit and will contest them vigorously."
Clear Channel shares have been volatile for months. Shares fell $5.64, or more than 17 percent, to $26.92 Wednesday, the day after reports surfaced that the deal was on the brink of collapse. Following the lawsuits, the share price climbed $2.43, or 9 percent, to $29.35 in after-hours trading.

But the share price remains anemic compared with the $39.20 the equity firms agreed to pay for the company. The equity firms say they remain committed to closing the deal. If they don't, they face an estimated $500 million to $600 million in breakup fees.

The deal was scheduled to close by Monday. Failure to close on time opens the parties up to fees and other potential problems.

SMH Capital analyst David Miller said banks that were gladly loaning money for ever bigger leveraged buyouts just a year ago are now concerned about whether the company can generate enough free cash flow to cover the interest payments in a miserly credit market.

The banks are looking at a $3 billion to $4 billion write-down on the loan, so there's obvious incentive for lenders to seek a way to renegotiate or pull out.

Clear Channel has had success before in forcing a deal through legal action. The $1.1 billion sale of its television group closed after the company lowered the price by $100 million and sued Providence Equity Partners, which had been having difficulty getting Wachovia to make good on its earlier financing commitment.

Clear Channel is the nation's largest operator of radio stations, a business that has been stagnant for years as digital music players and satellite radio have siphoned off listeners and advertising dollars.

The company now generates more than half of its revenue from its billboard business, consisting of roughly 800,000 signs worldwide, and that business has been growing as advertisers have shifted spending away from other avenues to billboards, which are harder for consumers to bypass.

Clear Channel Communications Inc. and the private equity firms seeking to close a $19.5 billion buyout of the company have sued their lenders.

The radio and billboard giant filed suit Wednesday in Texas, claiming the five banks who promised to finance the deal are reneging. The private buyers, led by Bain Capital and Thomas H. Lee Partners, also sued.

The banks signed letters backing the deal, but in the 18 months since it was first made, the credit market has gotten much tighter and Clear Channel's stock is now trading well below the $39.20 that the buyers committed to pay.

The private equity firms face an estimated $500 million to $600 million in breakup fees if the deal does not go through.

Shares of Clear Channel closed down 17% to $26.92 on Wednesday as shareholders grew pessimistic about whether the deal would go through.

The buyout was supposed to be completed by Monday.

The Britney Industrial Complex

By Richard Cohen, Washington Post

Tuesday, January 22, 2008; 12:00 AM
http://www.washingtonpost.com/wp-dyn/content/article/2008/01/21/AR2008012101691.html?sub=AR

The most useful magazine journalism of the (still) new year comes to us not from the usual sources -- Newsweek, Time, etc. -- but from Portfolio, a business publication. It has enumerated the vast amounts of money Britney Spears is worth not just to herself, but to others as well -- about $110 million to $120 million annually to the struggling U.S. economy. This is what Portfolio calls the Britney Industrial Complex.

Spears' ubiquity goes without question. She gets the sort of coverage only dictators, potentates or absolute monarchs can command or even dream of. "Between January 2006 and July 2007, Britney was a cover subject of People, Us Weekly, In Touch, Life & Style, OK!, or Star a total of 175 times in just 78 weeks," Portfolio tells us. And on Yahoo, just to throw another statistic your way, she was the No. 1 search subject in six of the last seven years. Her single slip to No. 2 came in 2004, when she was bested by Paris Hilton -- a dark, dark year for us all.

Portfolio says a Las Vegas nightclub reportedly sold seats next to Spears' table for $50,000. (I'd like to see a cover story on those people!) Spears herself gets a reported $250,000 to $400,000 just to appear at an event, giving new meaning to Woody Allen's observation that "90 percent of success in life is just showing up." At Spears' prices, Woody would no doubt show up 100 percent of the time.

Portfolio's point, and mine as well, is that Spears is big business -- and ought to be viewed that way. She herself still makes oodles of money -- about $9 million a year, the magazine says -- and maybe has a personal fortune of about $125 million. In a way, though, she is worth as much to others as she is to herself, if such a thing is possible. One photo agency, X17, sold $2.5 million worth of Spears pictures in 2007, and although it did not do better with Britney than Britney did with Britney, it didn't have to pay Kevin Federline $35,000 a month in child and ex-spouse support either.

The Britney Industrial Complex is a handy tool to examine more than just Britney Spears. It also explains why Hillary Clinton's human backdrop changed from Iowa to New Hampshire. On election night in Des Moines, Clinton surrounded herself with familiar figures, some of them not so young anymore, while Barack Obama had a backdrop of youthful faces radiating pheromones. By New Hampshire, Clinton had younged-up her crowd, suggesting she was now, like Obama, an agent of change.

A major difference between young people and older ones is that the former are likely to spend their last cent on whatever attracts them. Why not? They usually don't have kids or mortgages, or live with the fear that their boss has blown the money that was in their 401(k) accounts on his mistress. That being the case, young people are beloved by marketers who will flatter them just so they can reach into their pockets and take their last penny. This, in an abridged form, is why we have come to see young people as somehow inherently wise and able to peek into the future. Marketers have lied to them in the same way that a man on the make tells a woman that she is -- cross his heart and hope to die -- the loveliest of all things. In America, the consumer is never wrong.

Portfolio's Britney Industrial Complex illustrates the economy's need for celebrities. Vast amounts of money can be made by manufacturing ones who appeal particularly to the young. Spears was once one of those, although at age 26 she has leaped that demographic boundary. Still, the breadth of her drawing power cannot be fully estimated. Portfolio's concoction does not, for instance, measure her worth to the morning television shows -- "Today," etc. -- which on any given day are mere adjuncts to the fan magazines. Nor can it measure what she is worth to us as a topic of common interest for our communal water-cooler moments. Even this column has, in a sense, exploited her.

It is one thing to do an economic analysis of Britney Spears and still another not to see her as a sad, updated version of the lumpy prizefighter from more than one black-and-white movie. She's taken too many punches and soon those who have attached themselves for the ride will drop off. As Portfolio shows, the Britney Industrial Complex represents an economic truth -- as good a reason as any for economics to be called the dismal science.

Tired of Poll-Driven News Coverage of Elections, Instead of Issue-Driven News Coverage?

Lie to a Pollster.

-----
Note: While we'll never get a handle on global warming and smog as long as we continue to be tied to cars and oil as the main way to get around, until that changes it's good to see an independent oil firm push for more competition. While oil companies over the last 20 years have been closing gas stations despite the huge growth in the number of cars in the USA, all the while buying each other and concentrating control of the remaining gas stations in the hands of 5 big corporations, one independent is opening new gas stations...

Valero steps on the gas in state

The company's service station growth pace has been speedy since entering the California market in 2000.

By Elizabeth Douglass, Los Angeles Times Staff Writer

January 7, 2008 Three gas stations vie for customers along Interstate 5 in Cardiff-by-the-Sea, but Cheryl Ahern-Lehmann usually bypasses the Chevron and Arco in favor of a station she once spurned as too pricey.

That station in north San Diego County, a Texaco for years, won her business after n Antonio-based Valero, which began gasoline operations in California in 2000, now owns two of the state's 14 fuel-making refineries and displays its brand on 921 service stations out of a statewide total of around 9,400. In the last three years, the company has added nearly 300 Valero locations to its California roster.

Valero's quiet expansion, which has continued apace across the country as well, represents an unusually speedy entry for a new brand. The company's push is all the more unusual because it comes as many major oil companies shed dealers, sell off stations to wholesalers and concentrate on larger, high-volume locations known as "super-pumpers."

"All the major brands have indicated that they really don't want any more gas stations . . . and they're terrified of cost cutting by companies like Costco and Wal-Mart," said Charles Langley, gasoline project manager at the Utility Consumers' Action Network, a San Diego-based watchdog group. Of Valero, he said, "they're the only brand that I see that actually seems to be growing and is aggressive about growing."

Since 2000, Valero has gone from an industry footnote to the largest refiner in North America, with 17 plants from California to Aruba in the Caribbean. The company supplies 5,800 gas stations in 38 states using the Valero, Diamond Shamrock, Shamrock, Ultramar and Beacon brands. Most of the sites are owned and operated by individual dealers and distributors instead of by Valero.

for rest of story: http://www.latimes.com/business/la-fi-valero7jan07,1,5037050.story?page=1&ctrack=1&cset=true&coll=la-headlines-business

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Cable group says it opposes bundling

From Bloomberg News
January 5, 2008

A group representing 1,100 smaller cable companies said Walt Disney Co., Viacom Inc. and other network owners force them to buy unwanted channels, and asked the Federal Communications Commission to step in.

The American Cable Assn. made its remarks in a filing to the agency, which requested comments by Friday on the practice of bundling, or requiring more program purchases when cable operators buy the most-popular channels.

Disney, in a separate filing, said the market is fair and FCC action isn't needed.

The cable operators' group gives FCC Chairman Kevin J. Martin support for plans to widen industry regulation. He has criticized the cable industry for boosting prices 93% from 1995 to 2005.

Thirteen of the biggest channels, such as Disney's ESPN and Disney Channel and Viacom's MTV, are bundled with obligations to carry at least 60 other channels, the trade group said.

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Scam to get consumers to replace their DVD Collections Picks Up Steam?
(When they come up with some "high definition" writing, let me know...)

---------------------------------------------------------

DVD format war appears to be over

Warner picks Blu-ray over HD, but some say the Net may beat both.

By Dawn C. Chmielewski, Los Angeles Times Staff Writer

January 5, 2008

The fuzzy future of high-definition DVD came into sharper focus Friday after Warner Bros. said it would release movies for the home video market exclusively on the Blu-ray disc format.

The decision, announced on the eve of the influential Consumer Electronics Show, delivers a de facto knockout punch to the rival HD DVD format backed by Toshiba Corp. and others now supported by only two of Hollywood's six major movie studios.

It also averts a further costly format war that has been stymieing the growth of the next generation of DVD with promises of enhanced video images and digital audio to match the popularity of flat, big-screen television sets. For the first time, sales of movies on regular DVDs declined last year, jeopardizing a longtime and important source of profits for Hollywood. The studios hope the new, higher-quality format will spur consumers to restock their DVD shelves.

In addition to Warner Bros., studios supporting the Blu-ray format include News Corp.'s 20th Century Fox, Walt Disney Co., Sony Pictures and Metro-Goldwyn-Mayer. Taken together, they represent about 70% of the home video market. HD DVD is supported by General Electric's NBC Universal, Viacom Inc.'s Paramount Pictures and the independent studio DreamWorks Animation.

"Expect HD DVD to die a quick death," said Richard Greenfield, an analyst with Pali Research in New York, in a research note Friday.

Late Friday, the HD DVD group canceled a news conference scheduled for Sunday at the Consumer Electronics Show in Las Vegas. "We are currently discussing the potential impact of this announcement with the other HD DVD partner companies and evaluating next steps. We believe the consumer continues to benefit from HD DVD's commitment to quality and affordability," the group said in a statement.

The larger question, however, is how long even the winning high-definition DVD format may survive. Some analysts say the battle between Blu-ray and HD DVD may become irrelevant as high-speed Internet and on-demand video become the pipelines of movies into the home.

"I think the fat lady just sang," said Rob Enderle, principal analyst with Enderle Group in San Jose. "This gives Blu-ray a decisive lead. The question now is whether it is too little too late."

Enderle said consumers might have moved on to digital downloads to get movies rather than wait to buy them on next-generation DVDs. The next big chance to sell high-definition movie players won't be until next Christmas, he said. "By then, it may all be moot."

Warner Bros. had remained neutral as the rival technology camps spent millions to win over consumers. Each group engaged in aggressive price cutting and promotions this holiday season in an attempt to persuade consumers to take the high-definition DVD plunge.

But sales of these next-generation discs fell short of expectations, given the huge summer box office from popcorn movies, said Kevin Tsujihara, president of Warner Bros. Home Entertainment Group. Nor, he added, did the high-definition DVD players keep pace with the sale of high-definition TVs.

"There's a window of opportunity here," Tsujihara said. "There are a number of high-definition television sets being purchased. The best time to sell one of these high-definition DVD players is when the consumer walks out the door with that television set. That window was beginning to close on us."

Warner Bros. even sought its own solution to the format war at the 2007 Consumer Electronics Show, proposing a high-definition disc that combined the Blu-ray and HD DVD formats. But Warner was the only studio to embrace the dual format, so it never reached stores.

Sony Corp.'s Blu-ray discs have had a 2-1 sales edge since the beginning of 2007, thanks to its exclusive studio deals and the sale of Sony PlayStation 3 game consoles that play films in that high-definition format.

That prompted the HD DVD camp to flash its cash to remain viable. It paid $150 million to Paramount Pictures and DreamWorks Animation in August to secure exclusively the rights to such major movies as "Transformers" and "Shrek the Third" on HD DVD. Paramount had previously released movies in both high-definition formats.

"HD DVD had a lot of momentum in 2007 when they had their own defection of Paramount. That was a very big move," said J.P. Gownder, an analyst with Forrester Research in Cambridge, Mass. "Now, the balance of power shifts back to Blu-ray."

The Paramount deal reportedly sparked a furious courtship of Warner, which was the last of the major studios to support both high-definition DVD formats. Warner will begin releasing movies exclusively on Blu-ray in June.

Barry Meyer, chairman and chief executive of Warner Bros., flatly denied that the studio was offered a big check to choose the Blu-ray format.

"This was not a bidding contest between the two formats. This is a huge business for us," Meyer said. "We're the market leader globally. We're not going to make a strategic decision based on any kind of short-term financial gain."

Nonetheless, studios such as Warner are facing pressure to grow the nascent high-definition video business at a time when consumer spending on DVDs is declining.

And it's clear that the format war -- though benefiting consumers by driving down the price of high-definition DVD players -- has been confusing them too and keeping them from replacing their DVD players and their movie collection.

"Unfortunately, the loser here with the format war has been the consumer," Gownder said. "We found that 28% of people said the fact that there was a format war meant they weren't going to buy a high-definition DVD player. They weren't going to try to figure it out."

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TRIBUNE COMPANY:

SUMMARY OF WHAT THEY OWN:

23 TV stations--Major carrier of the CW Network, which is owned by CBS and Time-Warner

1 radio station in Chicago

13 daily newspapers mostly in big markets

1 nationwide cable channel-WGN



According to wikipedia:

The Tribune Company (NYSE: TRB) is a large American multimedia corporation based in Chicago, Illinois. It is the nation's second-largest newspaper publisher, responsible for the Chicago Tribune, Los Angeles Times, Newsday, Hartford Courant, and the Baltimore Sun, among others. Through other subsidiaries, the Tribune Company also owns Tribune Broadcasting, Tribune Entertainment, Tribune Media Services, and the Chicago Cubs baseball team.

On April 2, 2007, Chicago-based investor Sam Zell announced plans to buy out the media company for $34.00 a share, totalling $8.2 billion. Zell will also turn the company private. The deal is expected to be completed some time in the fourth quarter of 2007[1], and was approved by 97% of the Company's shareholders on August 21, 2007[2]. Upon completion of the transaction, Tribune will divest itself of the Chicago Cubs and its 25 percent interest in Comcast SportsNet Chicago, and possibly Wrigley Field.

The deal was approved by 97% of the Company's shareholders on August 21, 2007.[1] Privatization of the Tribune Company occurred on December 20, 2007 with termination of trading in Tribune stock at the close of the market.[2]

On 21 December 2007, Tribune and Local TV announced plans to collaborate in the formation of an as yet unnamed "broadcast management company".[3]


Television:

CW Stations:
WPIX 11 - New York
KTLA 5 - Los Angeles
WGN 9 - Chicago (Tribune's flagship TV station)
KDAF 33 - Dallas
WDCW 50 - Washington
KHCW 39 - Houston
WSFL 39 - Miami/Ft. Lauderdale
KWGN 2 - Denver
WTTV 4 - Bloomington/Indianapolis
KSWB 69 - San Diego
WTXX 20 - Waterbury/Hartford/New Haven
WNOL 38 - New Orleans
KPLR 11 - St. Louis
KRCW 32 - Portland, OR


Fox Stations:
KCPQ 13 - Tacoma/Seattle
KTXL 40 - Sacramento
WXIN 59 - Indianapolis
WTIC 61 - Hartford/New Haven
WXMI 17 - Grand Rapids/Kalamazoo, MI
WPMT 43 - York/Harrisburg, PA


ABC Station:
WGNO 26 - New Orleans


MyNetworkTV Stations:
WPHL 17 - Philadelphia
KMYQ 22 - Tacoma/Seattle


Other TV Assets:

Tribune Entertainment
Andromeda
Mutant X
BeastMaster
Family Feud
South Park
Soul Train
Candid Camera
Ron Hazelton: House Calls
Pet Keeping City Guys
Earth: Final Conflict


Cable Channels:
Superstation WGN

Chicagoland's Television

Tribune Broadcasting

Once owned 1/3rd of the Food Network, but it’s now owned by Scripps co.

Radio WGN (AM) – Chicago


Newspapers:

Newsday (Long Island, NY)
Los Angeles Times
Chicago Tribune
The Redeye
Baltimore Sun
AM New York
South Florida Sun-Sentinel
Orlando Sentinel
The Hartford Courant
The Morning Call (Allentown, PA)
Daily Press (Newport News, VA)
The Advocate (Stamford, CT)--sold 2007
Greenwich Time (CT)--sold 2007
Hoy (newspaper)
El Sentinel (Orlando)


Other:

Chicago Cubs (and Wrigley Field)

Tribune Media Services

Classified Ventures, LLC (partial)

CareerBuilder (partial)

Brass Ring

Zap2it

Chicago magazine

Forsalebyowner.com

Channel Guide Magazine


Former Tribune Properties:

Television:

(Station and Market | Former and Current Affiliations | Sold to...)
WATL, Atlanta, GA | WB/MyNet | Sold to Gannett Corporation in 2006
WCWN, Albany, NY | WB/CW | Sold to Freedom Communications in 2006
WGCL (formerly WGNX), Atlanta, GA | Ind./CBS | traded to Meredith Corporation in 1999 WLVI, Boston, MA | WB/CW | Sold to Sunbeam Television in 2006

-10/2007 Time Media sells the Recycler Classifieds to Target Media Partners. Recycler publishes 4 ad papers, and 11 weekly or bi-weekly photo ad and employment guides in Southern California.

-10/2007 The Tribune Company sells its two southern Connecticut daily papers, the Greenwich Time and The Advocate of Stamford, to Hearst Corp. for $62.4 million. The papers will be managed by MediaNews Group.

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Murdoch Deals Some of his TV Empire to Affiliate of the Tribune Company

12-24-2007

BACKGROUND:

Tribune is the major carrier of the CW Network, which is the joint venture of CBS and Time-Warner. Tribune now owns 23 major market TV stations. After this series of deals, Tribune will take over management of 17 more.

Rupert Murdoch will still own 2 TV stations each in L.A., New York City, Chicago, Dallas-Fort Worth, Houston, Phoenix, Minneapolis, Orlando, Washington D.C. and one station in Philadelphia, Atlanta, Detroit, Tampa, Baltimore, Austin, Memphis, Winston-Salem and Ocala-Gainesville Florida.

News Corp. sells 8 Fox stations

Cory Bergman December 22nd, 2007

News Corp. has sold eight of its 35 stations to Oak Hill Partners, a private equity firm. The stations sold are: WJW (Cleveland), KDVR (Denver), WGHP (Greensboro), KTVI (St. Louis), WDAF (Kansas City), WITI (Milwaukee), KSTU (Salt Lake) and WBRC (Birmingham). Oak Hill already owns 9 other stations under the name Local TV LLC, and the WSJ reports that the day-to-day operations of all the stations may fall to Tribune. After all, Local TV’s top exec was just hired by Sam Zell to take over Tribune’s broadcast and internet operations.

Fox sells eight TV stations to Oak Hill

News Corp. had made good on its promise to sell eight of its Fox TV stations, and it did to the newly-formed Local TV group headed by private equity firm Oak Hill Partners for $1.1 billion. The proceeds from the sale gives News Corp. the cash it needs to purchase the Wall Street Journal.

In a separate development, Tribune and Oak Hill have agreed to create a third-party management company that will share administrative duties. Randy Michaels, who was CEO of Local TV, was named Thursday as CEO of Tribune Broadcasting and Tribune Interactive.

The eight stations being sold are: WJW-TV in Cleveland, KDVR-TV in Denver, KTVI in St. Louis, WDAF-TV in Kansas City, WITI-TV in Milwaukee, KSTU in Salt Lake City, WBRC-TV in Birmingham, and WGHP-TV in Greensboro-High Point, N.C.

Six of these stations - WJW, KTVI, WDAF, WITI, WBRC, and WGHP - were former affiliates of the Big Three networks that were involved in the New World-Fox affiliation switch in 1994 and 1995. New World Communications sold all but two of its stations to Fox in 1997.

Local TV launched earlier this year when it made a deal to acquire eight former New York Times Co. stations, including WREG-TV (CBS) in Memphis, KFOR-TV (NBC) in Oklahoma City, WNEP-TV (ABC) in Wilkes-Barre/Scranton, Pa., and WQAD-TV (ABC) in Moline, IL.

The transaction leaves Fox with 26 stations (for now - the fate of WHBQ in Memphis is still undetermined), including WFLD-TV and WPWR-TV in Chicago.

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Boo Hoo!...Media Giants Say Anti-Monopoly Rules Governing the Public-Owned, but Corporate-Occupied Airwaves are Unfair...to Them

Feds bottle caps
Congloms prep deals as end to regs looms

http://www.variety.com/article/VR1117852459.html?categoryid=1064&cs=1

By PAMELA MCCLINTOCK, 9/10/2001

WASHINGTON -- The forecast for the next wave of media consolidation got friendlier Friday when a federal appeals court sent strong signals that it will allow networks and the congloms who own them to add unprecedented numbers of TV stations and cable systems to their empires. Reps of the mega-companies that dominate the entertainment biz were present -- and smiling -- during oral arguments before a three-judge appellate panel in the nation's capital. Ultimately, the court's ruling could reshape the TV biz in terms of who controls both programming and distribution. It didn't take long for the robes to begin questioning the merits and constitutionality of two Federal Communications Commission ownership rules underpinning the historic balance between nets and affiliates, as well as the historic tension between broadcasters and cablers.

"You're in a jam," said Judge Harry Edwards to FCC general counsel Grey Pash. CBS, Fox and NBC want the court to scrap an FCC cap that blocks a broadcaster from reaching more than 35% of the national audience.

Counsel for the nets told the appeals court that the FCC reg is "oppressive" and a violation of the First Amendment. "Every day this rule is in effect, we are being deprived of reaching 65% of the nation's households" said Edward Warren, attorney for the Eye, Fox and Peacock.

Already, CBS parent company Viacom is at about 40%. Fox is likewise over the cap due to its recent merger with Chris Craft. Affiliates, i.e., independent station owners, argue that the rule is their last defense against the power of the networks, and that the nets shouldn't be allowed to dominate both programming and distribution. Should the 35% cap be lifted, networks will use their leverage and might to determine compensation and to buy up stations, according to the National Affiliated Stations Alliance (NASA) and the National Broadcasters Assn. (NAB). While most attention has been focused on the 35% rule, the second FCC ownership reg up before the appeals court is of equal significance. As it stands now, the FCC won't allow a broadcaster to operate a cable system in the same market. Thus, congloms like AOL Time Warner can't get into the lucrative business of operating a TV station in any of the many markets where they provide cable service. Another good example is the Walt Disney Co., which would have to dump stations in certain major markets if it wanted to pursue a merger with a cable giant such as Comcast. (While the Mouse isn't a direct party in the appeals case, top Disney lobbyist Preston Padden made sure to be on hand Friday.) During the much-anticipated hearing, AOL Time Warner general counsel Paul Cappuccio told the court that the cross-ownership cable/broadcast rule equals "ongoing suppression" and "irreparable harm."

Pash bashing?

But the three appellate robes reserved most of their questioning for FCC counsel Pash, who didn't seem to make much headway in arguing that overturning the rules would have "enormous adverse consequences." The judges said it would be more than appropriate for the court to strike the ownership rules, but let the FCC draw up new limits -- this time, with adequate justification. Consumer advocates say remanding the rules to the FCC would be tantamount to overturning them altogether, since Republican FCC topper Michael Powell has made it clear that he favors deregulation. Others disagree and say that now that he heads the regulatory agency, Powell must take a more centrist position compared to that he maintained previously as just a commissioner.

Nonetheless, it was difficult for affiliates to appreciate the witty barbs that punctuated much of Friday's legal session. "I don't mean to disturb the good humor, but please, hear me out," said attorney Bob Long, who argued for the NAB and NASA, which reps the more than 600 CBS, Fox and NBC affiliates.

Reach breach

Long said it was a "gross overstatement" for the networks to argue that they are being cut off from reaching 65% of the American audience, considering that nets reach virtually everyone through broadcast programming alone. What's more, companies like Viacom that own some of the nets provide vast cable programming.

But nets say the affiliates are crying wolf and that affils still enjoy enormous power, pointing out that some larger station groups, such as Tribune, are nearing the 35% limit themselves. In the competitive age of cable and satellite, networks say they shouldn't be barred from fully participating in the marketplace. Even before the oral arguments, the nets and AOL Time Warner were predicting success. Several months ago, the same appeals court struck down an FCC cable ownership rule prohibiting a cabler from reaching more than 30% of the national audience. FCC cap cast The FCC will soon launch a public probe into whether the cap should be kept in some fashion, but again, people are predicting that Powell will work toward deregulation. In the coming days, the FCC is expected to launch a similar probe into repealing a cross-ownership rule barring a broadcaster from owning a newspaper in the same major market. Powell is definitely opposed to this regulation. Meanwhile, the federal appeals court is expected to rule on the two ownership rules in the next few months.

-----------------------------

It's not fairness

L.A. Times Editorial 7/24/2007

There are plenty of opinions on the airwaves; the government doesn't have to mandate equal time.

(Democrats) anger at (talk radio) demagoguery is justified, but their response isn't. They want to re­vive the Fairness Doctrine - a Cold War-era federal rule designed to promote balanced coverage of important isues on the public airwaves. Under this rule, broadcasters who took a side on a divisive topic could be compelled to give free airtime to opposing points of view. If they refused, they risked losing their licenses.

The threat to talk radio is clear. If the rule were reinstituted, stations that carry Rush Lim­baugh could be forced to broadcast commentaries favoring everything that Limbaugh derides, from greenhouse gas controls to same-sex marriage. With hundreds of provocative talk-show hosts on the air, federal regulators could soon be awash in demands for rebuttals.

But the danger posed by the Fairness Doc­ttrine Is broader and more fundamental than an attack on a radio format. No matter what your point of view might be, you have free or inexpensive out­lets available today to express It - maybe not a radio or TV station but certainly a website, a video blog, a podcast or an e-mail newsletter. At the same time, the public has unprecedented access to a diverse array of opinions. Just as the govern­ment shouldn't decide what you say on the chan­nels you create, nor should it be able to dictate the range of opinions people hear over the air.

The Federal Communications Commission instituted the Fairness Doctrine in the late 1940s as a compromise of sorts - it wanted broadcast­ers to pay attention to local issues but feared they would exert undue influence over them. It aban­doned the rule in 1987 on grounds that the rise of cable TV networks had diluted broadcasters' sway over public opinion. The proliferation of media sources has made that dilution even more pro­nounced today.

Granted, broadcasters remain the most pow­erful voices because they're the ones with the larg­est audiences. But that's because the public chooses to tune them in, not because there are no alternatives. Restoring the government's power to monitor broadcasters' fulminations and splice in opposing views seems more likely to tame speech than to enlighten listeners.

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What can we own?

L.A. Times editorial, 8/25/2006

MEDIA COMPANIES IN THIS COUNTRY face unreasonable government restrictions on their activities. Yet for the Federal Communications Commission, rewriting the ownership limits for television and radio stations has been a labor fit for Sisyphus. The commission updates the rules every few years, as required by law, only to have a federal appeals court or Congress smack them down.

The latest go-round started when the Commission announced in June that it would reconsider some of its rules limiting what companies can own. The FCC had tried to ease or eliminate these limits in 2003, only to have its actions blocked by the U.S. 3rd Circuit Court of Appeals. The Senate, prodded by a motley alliance of anti-corporate zealots and conservative activists who think local media tycoons are less lib­eral than national media tycoons, also intervened.

Media ownership restraints seek to preserve a healthy competition of distinct voices, but the rules developed over the decades are woefully outdated. If anything, what the FCC tried to do three years ago was too modest. In an age of cable and satellite TV (not to mention an age of You Tube. com -It's no longer justifiable for the government to impose any limits on how many affiliates broadcast networks can own, given that CBS, NBC and ABC no longer control the distribution of their programming the way they did when American families gathered around their sets to watch "I Love Lucy," captured by their rabbit-ear antennas.

And yet the FCC only sought to raise the percent­age of the national audience that network-owned at affiliates can reach from 35% to 45%. This would have been a radical move - in 1960. Three years ago, It was laughably meek. After a compromise raised the limit to 39%, these rules aren't even on the table for review this time around.

A different set of rules limiting the number of me­dia outlets one company can own within the same city do remain relevant. Here again, the FCC was rather prudent in its ill-fated 2003 ruling. The Commission would have let TV groups control three sta­tions in markets with at least 18 outlets, and two sta­tions in markets with five to 17 outlets - although only one of the stations could be among the four most popular in that community. It also proposed to allow TV, radio and newspaper owners in a community to consolidate to varying degrees, depending on the number of TV stations in the market.

Full disclosure: Tribune Co., owner of this news­paper and KTLA-TV Channel 5, would benefit from a relaxation of these rules. Indeed, its purchase of The Times in 2000 was allowed because of the widespread assumption that the so-called cross-ownership rule banning ownership of a broadcast station and news­paper in the same city would soon be retired, as it should be.

More cities might still have a competitive news­paper market if more broadcasters had been allowed to buy newspapers in the past.

Studies show that those broadcasters that do operate local newspapers through waivers or exemptions offer more news and public affairs programs, on average, than competi­tors that don't. Moreover, the business challenges facing media giants such as Tribune and Time Warn­er Inc., which had hoped for greater "synergy" divi­dends, underscore the ever-changing media land­scape and the fact that Americans have a growing number of media choices. The number of people who regularly watch local TV news is down from 77% in 1993 to 54% today. It's in their interest that the FCC press ahead with liberalization.

(Editor's note. This claim that letting TV station operators also buy up daily newspapers will lead to a competitive newspaper market is totally bogus. In fact, only a few companies control most of California's daily newspaper subscribers.

See http://greedwatch.blogspot.com/search/label/Newspapers, for list showing that 40% of California daily newspapers are owned by one company, MediaNews Group, which is also partners with Hearst Corporation, a large owner of TV stations and cable TV channels. Two of the other largest daily paper owners in California, Tribune company and Freedom Communications also own lots of TV stations. With this control of California daily papers by TV station owners, you'd think that most towns would have two or more daily, competitive papers, based on the L.A. Times' logic. Not so. In fact, it's very hard to find a city in this state where one paper isn't totally dominant. )